Cotton moves higher as planting progress slow

General Comments: Futures were higher on what was called speculative short covering. Today is First Notice Day for May contracts, and some were getting out before the deliveries get underway. There was also a lot of prices getting fixed against contracts with producers London was a little higher and all markets show signs of completing bottoms. Spreads in both London and New York have been firm, implying the market has demand and fewer offers. Prices in general have been weak as traders anticipate another big crop out of Brazil starting the summer. Ideas are that supplies are good for now and can only increase down the road as Brazil will soon start to harvest. Rains continue in Vietnam and crop conditions have improved. Current crop development is still good this year in Brazil, but it has been dry for the past week. Production ideas remain big there. Central America crops are mostly harvested and is too dry for new crop flowering. Colombia is reported to have good conditions.

Overnight News: Certified stocks are higher today and are about 2.738 million bags. ICE delivery notices are 85 contracts today and now total 85 contracts for the month. LIFFE stocks are now 12,625 lots. The ICO composite price is now 133.00 ct/lb. Brazil should get mostly dry conditions. Temperatures will average near to above normal. Colombia should get scattered showers, and Central America and Mexico should get mostly dry conditions. Temperatures should average near to above normal.

Chart Trends: Trends in New York are mixed to up with objectives of 145.00 and 151.00 July. Support is at 140.00, 137.00, and 134.00 July, and resistance is at 145.00, 147.00, and 150.00 July. Trends in London are mixed to up with objectives of 2150 and 2215 July. Support is at 2065, 2045, and 2035 July, and resistance is at 2120, 2130, and 2140 July. Trends in Sao Paulo are mixed. Support is at 168.00, 166.00, and 163.00 September, and resistance is at 176.00, 180.00, and 183.00 September.

SUGAR

General Comments: Futures closed higher and closed at the high end of the trading range. Traders are keeping an eye on developments in Brazil and expect big production as the harvest moves forward. However, some now say that Brazil mills will concentrate on Ethanol production first and Sugar production second, and that could create some short term shortages for the market. Most traders remain bearish longer term on ideas that big production will be available to the market as the Brazil harvest is processed and comes to market. Chart patterns are sideways for the short term. Reports indicate that Brazil will start harvesting this month and that a big offer is expected. Exports from Brazil continue to be very strong overall despite the port problems.

Overnight News: Mostly dry conditions are expected in Brazil. Temperatures should average near to above normal.

Chart Trends: Trends in New York are mixed. Support is at 1740, 1710, and 1680 July, and resistance is at 1800, 1830, and 1850 July. Trends in London are mixed. Support is at 500.00, 496.00, and 494.00 August, and resistance is at 513.00, 516.00, and 520.00 August.

COCOA

General Comments: Futures closed higher and made new highs for the move on favorable US grind data. Chart patterns suggest further rallies could be coming and fundamentals for the short term could support the charts as demand seems to be better than trade expectations. The flow of Cocoa from western Africa is weaker, and traders wonder about the quality and size of the mid-crop after some hot and dry weather during the growing season. However, weather has improved in western Africa lately with more rain and somewhat cooler temperatures. Ideas are that production in West Africa could be less next crop year as well. The mid-crop harvest is underway, and less than expected production along with smaller beans is reported. Malaysia and Indonesia crops appear to be in good condition and weather is called favorable.

Overnight News: Scattered showers are expected in West Africa. Temperatures will average near to above normal. Malaysia and Indonesia should see episodes of isolated showers. Temperatures should average near normal. Brazil will get mostly dry conditions and warm temperatures. ICE certified stocks are higher today at 4.739 million bags. ICE said 0 delivery notices were posted against May contracts today and that total deliveries are now 727 contracts.

Chart Trends: Trends in New York are up with objectives of 2370 and 2530 July. Support is at 2295, 2275, and 2255 July, with resistance at 2350, 2385, and 2400 July. Trends in London are up with objectives of 1580 and 1670 July. Support is at 1525, 1490, and 1455 July, with resistance at 1560, 1570, and 1590 July.

About the Author

Jack Scovilleis a veteran futures market analyst specializing in grains, softs, rice, oilseeds, and tropical products such as coffee and sugar. His industry contacts in South America, Europe, Asia, and North America provide him with a unique and comprehensive view of these markets. Jack began working in the futures industry over 30 years ago and spent 10 years working on the floor of the Chicago Board of Trade in various roles, starting with The PRICE Futures Group since it was established in 1988. Jack writes daily commentaries - Morning Grains and Softs, in both English and Spanish and is regularly quoted around the world by news & wire services including Dow Jones, AP, Bloomberg, and Reuters. You can contact Jack by phone at (312) 264-4322 or by email at jscoville@pricegroup.com. Learn even more on our website at www.pricegroup.com.

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